Stocks, bonds, index funds, Roth
IRA’s and 401(k)
question of the day
• What 1996 sequel of a sequel grossed
$255 million less than the original?
• It featured a different actor for the main
character than the first two.
• Home Alone 3.
• list 5 things you know about the stock
top 6 reasons high school
students think you should
1. “make some money”
3. bragging rights
4. tax breaks
5. cash flow/real estate
6. for children’s college
the stock market: history
• first company to issue shares of stock after the
Middle Ages was the Dutch East India
Company in 1606.
• allowed production of expensive goods (i.e.
ships) to be completed by individuals and not
the stock market: purpose
• a company sells stock (ownership) to
raise capital (money).
• the stock market provides an arena for
people to buy & sell stocks.
• A company sells the
stock one time, the
rest is trading.
what does it mean to own
• owning stock means you have a stake in
the ownership of the company.
• you are entitled to a portion of the
• you have voting rights in company
other investment options?
• investing = putting your money
somewhere you have a chance to make
• varying degrees of risk.
• why not just keep your cash in a
shoebox under your bed?
• What are they?
– Mutual fund that tracks the entire stock
• Low risk
– Risk is spread out across a huge number of
• Low maintenance fees = more money
• What is it?
– An IOU from a company or government
that promises to pay you back what you
paid + interest after a certain amount of
• Companies do it to raise money.
• Stocks = equity, bond owners =
401(k) and Roth IRA
• Retirement accounts
• “Buckets” for other investments
• Tax benefits
• 401(k) = possible “free money” if your
today’s take away message
• the stock market is one place you can
invest your money.
• index funds are probably the best way to
invest in stocks.
• bonds are relatively secure places to put
• larger the risk, larger the return.
exit ticket: review quiz
1. To own stock means that…
a.) You have an ownership claim.
b.) You are entitled to some of the
c.) You are investing your money.
d.) All of the above.
2. A company sells stock to…
a.) Unload unprofitable assets.
b.) Raise capital.
c.) Only the executives of the
d.) Consolidate ownership among a
3. The New York Stock Exchange…
a.) is an example of a large auction
b.) is a new phenomenon.
c.) is where people go to open bank
d.) is actually located in New Jersey.
4. The higher the risk involved with
the investment, the _________
the likely return.
c.) likely return is unaffected by risk.
5. Which type of investment has the
a.) Junk bonds.
d.) Day trading.
6. Index funds are….
a.) A mutual fund made up of stock
from across the stock market.
b.) A single group of stock from the
c.) Very risky investments.
d.) Only bought by very experienced
7. Bonds are…
a.) A loan to a government, company,
b.) Relatively secure investments.
c.) Repaid with interest.
d.) All of the above.
8. 401(k)’s and Roth IRA’s differ
from stocks and bonds in that…
a.) They are extremely risky.
b.) They provide very high returns.
c.) Are actually just “buckets” that
hold other types of investments.
d.) None of the above.